Hindu Business Line carried an article by Aarti by the same title. She starts by saying it is blasphemous to even ask this question. I agree that it is the way the media has ‘asked’ people to think.
However, I belong to an old school of thought. It is easy to say ‘costs are everything’. Have you seen it in the concept of mutual funds?
The fund which was supposed to be the cheapest (lowest amc charges) is languishing at the BOTTOM.
It is all about fund management. If I were the shareholder of a company which was paying me 50% dividend and my Rs. 20,000 investment had become Rs. 34,00,000 in 20 years, will I be bothered about the CEO getting a salary of Rs. 5 crores? Hell no.
However if I had invested, got no returns, share was quoting below issue price, …and the MD wanted a salary of say 5 crores, I WOULD SCREAM.
Similarly I know fund managers on ZERO remuneration, just 20% of the profits (client to bear all the loss, but for remuneration purposes, the losses will have to be set off, before he gets his % age of profits)….such deals are not unknown. In a country where there are so many fund managers of dubious quality such well defined short term contracts will survive….hopefully!
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